A simpler way to estimate college costs?

On Sept. 18, Wellesley College, a private liberal arts college in Massachusetts, launched a new tool for prospective students: a simple cost-of-college calculator that crunches households’ finances to estimate how much families will likely have to pay.

The tool is similar to the net cost calculators that every college that participates in federal financial aid now has to post to its site. (In 2008, Congress mandated that every college participating in Title IV financial aid programs must offer an online tool for prospective students estimating how much families will owe after their financial aid is taken into account.)

However, unlike most college’s clunky cost estimators, which often take about 20 minutes just to fill out, Wellesley’s calculator tool is relatively fast and simple to use. It’s also not quite accurate.

The tool — which proponents say can be used to estimate the costs of similarly well-endowed, need-blind private schools — calculates how much parents are likely to pay after a student’s financial aid package is determined. However, as the New York Times’ David Leonhardt points out, it leaves out the total amount of loans that students will have to borrow.

Instead, Wellesley adds, in carefully worded paragraphs after the final estimate, that students are expected to contribute an extra $2,000 a year “based on earnings from a summer job or other source” and may also be on the hook for a “modest student loan.”

A closer look at Wellesley’s student loan policy shows that loan could be as high as $3,000 per year — which is relatively small, by today’s standards, but still adds up to a hefty $12,000 (plus interest) by the time a student graduates. If students are unable to come up with the extra $2,000 through another source, they could wind up with more than $20,000 in student debt — a substantial enough sum that it’s worth thinking about when you’re trying to estimate costs as a high school senior.

U.S. colleges have come a long way in recent years in helping to make college costs more transparent. U.S. regulators have also helped. (The CFPB now offers a financial aid comparison tool that goes a step further and calculates the total amount of debt a student will owe after graduation, once interest is factored in.)

However, it’s still tough these days to pin down just how much a family will owe, long after the tuition bills are due.

I recently tried using a handful of calculators offered by private and public colleges — including the University of Texas, Ohio State University, Harvard, George Washington University and my own alma mater, Sarah Lawrence — and was able to get a general sense of which colleges were more expensive. (It’s a lot pricier to attend Ohio State as an in-state student from a middle income family, for example, than it is to attend the University of Texas. And if you’re lucky enough to get into Harvard or another well-endowed school, such as Wellesley, you’re likely to pay a whole lot less.)

However, the calculators often used different and sometimes iffy criteria. For example, some asked about extracurricular activities, while others stuck solely to family finances. So it was tough to judge how accurate the comparisons were — or how likely it was that I’d qualify for that much grant aid.

And while most calculators estimated the total amount of student loans that I — or my theoretical child — would likely owe, they didn’t mention the interest that we’d have to pay. So it was easy to underestimate how much would actually be owed by the time the loans were due.

That made it harder to compare estimates — particularly since some schools didn’t mention what kind of loan you’d actually be offered. (A subsidized federal loan, for example, is significantly cheaper than an unsubsidized one.)

It also made it tough to estimate how much that borrowing would cost years after graduation. If a student borrows a certain amount, for example, how long will it take them to pay off their degree — particularly if they can only afford to make minimum payments after they graduate?

That’s an important factor in any decision. But for most students, they won’t be able to make those estimates until long after they’ve already applied.

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